Strategy Continues Accumulation Despite Bitcoin Briefly Trading Below Its Cost Basis for First Time Since 2023

Strategy Tests Its Bitcoin Conviction as Market Volatility Returns

The world's largest corporate Bitcoin holder just faced its first significant test since late 2023, as Bitcoin's sharp weekend decline briefly pushed Strategy's entire 713,502 BTC treasury below its average acquisition cost. The timing of the company's latest purchase—855 BTC acquired at $87,974 per coin just days before the crash—highlights both the challenges and commitment inherent in Strategy's relentless accumulation strategy.

This moment represents more than just market volatility; it's a critical data point for understanding how corporate Bitcoin treasuries perform during market stress and whether Strategy's capital-raising model can withstand extended periods of underwater positions.

The Facts

Strategy acquired 855 Bitcoin for $75.3 million during the week of January 26 through February 1, paying an average price of $87,974 per BTC, according to a Securities and Exchange Commission filing released Monday ^[1][2]. The purchase brought the company's total holdings to 713,502 BTC, accumulated for approximately $54.26 billion at an average cost basis of $76,052 per coin ^[1][2].

The acquisition proved poorly timed in the short term, as Bitcoin began the week above $87,700, briefly touched $90,000, then plummeted below $75,000 over the weekend ^[1]. Bitcoin fell to approximately $74,500 during early Asian trading sessions on February 1-2, temporarily pushing Strategy's treasury into unrealized losses approaching $1 billion before recovering ^[2]. At the session lows, losses were estimated at around $150 million as BTC rebounded to the mid-$75,000 range ^[2].

This marked the first time Bitcoin has traded below Strategy's cost basis since late 2023 ^[1]. The company financed the latest purchase entirely through the sale of Class A common stock (MSTR), generating proceeds of roughly $106.1 million, with an additional $8.06 billion worth of shares still available under the current capital-raising program ^[3].

Executive Chairman Michael Saylor telegraphed the purchase beforehand with a Sunday post containing the phrase "More Orange," which has become a recognized signal for impending acquisitions ^[3]. Strategy shares fell over 7% in premarket trading Monday to $138.49, marking a new multi-year low as Bitcoin's volatility weighed on crypto-exposed equities ^[2].

Despite the market turbulence, Polymarket bettors remain optimistic about Strategy's long-term trajectory, showing an 81% probability that the company's holdings will reach 800,000 BTC by the end of 2026—requiring purchases of at least 87,000 BTC over the next two years ^[1]. Simultaneously, the odds of Bitcoin falling below $65,000 in 2025 climbed to 72% on Monday ^[1].

Analysis & Context

This isn't Strategy's first encounter with an underwater treasury position, and examining the previous episode provides crucial context for investors assessing the company's resilience. When Bitcoin fell below $30,000 in May 2022 while Strategy's average purchase price stood at approximately $30,600, the company significantly slowed its acquisition pace, purchasing just 8,109 BTC throughout the entire year ^[1]. Bitcoin remained below Strategy's cost basis until late August 2023, during which Strategy made seven purchases totaling 28,560 BTC—representing about 22% of its holdings at the period's start ^[1].

The current situation differs in several important ways. First, Strategy's capital-raising infrastructure has matured significantly since 2022, with established equity and preferred share programs providing more reliable funding sources. The recent increase of its Series A Perpetual Preferred Stock dividend to 11.25% demonstrates the company's ability to attract capital even during volatile periods, with proceeds from preferred share sales financing over 27,000 BTC in recent acquisitions ^[2].

Second, the depth and brevity of this underwater period matters considerably. While Bitcoin traded below Strategy's cost basis for over a year during 2022-2023, the current dip lasted only hours before recovering above the company's $76,052 average ^[1][2]. This suggests either stronger underlying market support or merely the first test of what could become a prolonged correction.

The broader implications for corporate Bitcoin adoption are significant. Strategy's model has inspired numerous other companies to add Bitcoin to their balance sheets, but few have committed to the same aggressive, continuous accumulation strategy. If Bitcoin enters an extended bear market that keeps Strategy's treasury underwater for months, it could slow the corporate adoption trend as boards and shareholders question the wisdom of acquiring a volatile asset during price weakness. Conversely, if Strategy continues purchasing through adversity and ultimately profits as Bitcoin recovers—replicating its 2022-2023 experience—it would validate the "buy consistently regardless of price" approach that Saylor has championed.

The prediction market data revealing 72% odds of Bitcoin falling below $65,000 this year while simultaneously showing 81% confidence in Strategy reaching 800,000 BTC by end-2026 presents an interesting paradox ^[1]. It suggests market participants expect significant near-term pain followed by substantial recovery—a scenario that would test Strategy's capital-raising ability during the difficult middle period when both Bitcoin and MSTR shares face downward pressure.

Key Takeaways

• Strategy's treasury briefly fell underwater for the first time since late 2023, with Bitcoin dropping below the company's $76,052 average cost basis to approximately $74,500 before recovering—testing the resilience of the corporate Bitcoin treasury model.

• Historical precedent from 2022-2023 shows Strategy significantly slowed purchases when Bitcoin traded below its cost basis for over a year, acquiring just 8,109 BTC in 2022 compared to its current aggressive pace, suggesting a potential slowdown if bearish conditions persist.

• Despite near-term volatility, prediction markets show 81% confidence Strategy will reach 800,000 BTC by end-2026 (requiring 87,000+ BTC in purchases) even as Bitcoin faces 72% odds of falling below $65,000 in 2025, indicating expectations for recovery following potential deeper correction.

• Strategy's improved capital-raising infrastructure—including preferred shares yielding 11.25% that have funded over 27,000 BTC in recent purchases—provides stronger financing capabilities than during the 2022 bear market, potentially enabling more consistent accumulation through volatility.

• The company's willingness to purchase at $87,974 just before a crash demonstrates commitment to its dollar-cost averaging strategy regardless of short-term timing, though MSTR shares falling to multi-year lows could eventually constrain the equity-based funding model if market conditions deteriorate further.